Archive for November 23rd, 2010

Europe’s Century?

Now a days its trendy to be skeptical of the long term future of the EU or the Euro.  A crisis in Greece followed by a crisis in Ireland, whispers about possible financial contagion to Spain, Portugal and possibly Italy, and it appears the Euro is wobbling.   Alarmist (and wrong headed) squeals about “Eurarabia” and the spread of Islam, demographic trends that show an aging European society, and soon gloom and doomsayers are pronouncing Europe all be done for.    Nothing could be further from the truth.

Some of these doomsayers are the usual suspects wanting Europe to fail.   British Euroskeptics have been seeing conspiracies and catastrophes for decades, and many on the American right have been predicting that the “welfare state” mentality in Europe will doom it.    During the heady real estate bubble, Americans gloated that we had found the secret to long term economic growth — deregulation and limited government — and that the rapidly growing low unemployment economy of the 00’s was proof.

In fact, Eurocritics have gotten so used to assuming that Europe was in decline and America remained the indispensable power that despite the recent financial collapse and US debacle in Iraq, many cling to that illusion.   The reality is that not only is Europe not only still viable, but it may be on the verge of returning to the role as the leading world region.  The 21st century may be Europe’s century.

There are two primary reasons why Europe has positioned itself well for the next century: 1) a realistic understanding of the problems they face; and 2) a principled approach to globalization at moves away from myopic self-interest.

The issue of global climate change is one where these two come together and have already yielded substantial benefits for EU states.  First, unlike in the US, the discussion about climate change has not been hijacked by a well funded propaganda machine designed to denigrate, belittle and attack those wanting to take action.   Rather, the climate change scientists are being listened to, the evidence assessed, and they recognize that while there is always uncertainty, the risks are so great and the evidence so substantial that it would be irrational to do nothing, or wish the problem away.

In the US, unfortunately, the issue has become ideological, with many people equating support for action on global warming as a “left wing socialist agenda.”   Scientists are accused of graft, supposedly cooking data in exchange for government grants.   Emotive attacks and derision, repeated on a variety of media fronts, have moved the US public away from an honest consideration of the science to emotion over the politics of the issue.

In 1992 at the Rio Summit, the Climate Change Convention was signed, pledging that developed states would reduce their carbon emissions to 1990 levels.  The process was further refined by the 1997 Kyoto Protocol to that agreement, which went into force in 2005.   The US refused to participate.  The result:  The EU achieved the desired result, reducing emissions to below 1990 levels.    To be sure, the fact that the year after the fall of the Berlin Wall was chosen helped, but nonetheless the rise in technology and the effectiveness of the effort to reduce emissions is astounding.  It also provides proof that this can be done without hurting the economy.

In fact, by sticking to realism (and principle) the EU has positioned itself for a major economic advantage in the fields of alternate energy and anti-pollution technology.   These are the fields most likely to radically increase in demand in the coming decades, especially as China tries to switch towards alternative fuels and cleaner burning of coal.  EU companies are at the forefront of this new technology, and will likely profit handsomely from the Chinese market alone.

Meanwhile in the US, not only have carbon emissions increased by 20% since 1990, but we’re only now starting to pick up the pace again on alternative energy.   With the EU pushing for a decrease of 30% of carbon emissions by 2020 (regardless of what others do), and governments very involved in supporting R&D, the chances are very good that the EU will maintain and even expand its lead in this important market.

That’s another point of realism: not letting ideology guide policy.    Many Americans are still enamored with the idea of “the free market does things right,” a now rather discredited ideology given the costs of not regulating the financial sector (see Greenspan’s confession).   Still, it’s a seductive and simple ideology, and speaks to traditional American dislike of government rules and bureaucracy.    The problem, of course, is that markets respond to demand now, based on current conditions.   Humans have the capacity to study and understand trends for the future, including the likelihood of increased oil prices and the danger of another energy crisis.

The Europeans recognize that, and work with markets (not against them) to prepare for a different kind of future.   The market won’t do this on its own, at least not at a pace that will give the EU a comparative advantage when the change comes.   A pragmatic embrace of a government efforts to adjust the market now will likely pay large dividends.

On issues of human rights and efforts to support development, the EU has a mixed, but generally solid record.   On environmental issues, the EU is a clear leader.  The core principle, inherent in the EU shift away from myopic sovereign self-interest, is that working together we can solve problems and create a more just, safe and sustainable world.  This embraces a role for global governance, as states and regions can reach agreement and cooperate to solve problems.

The problem in the US is delusional thinking combined with heavily funded political propaganda which manipulates public opinion to serve the interests of a moneyed elite.   They use very seductive ideas (the market can do it, government is bad, there is no need to worry about global warming, if you cut taxes problems will be solved, it’s all the government’s fault, etc.) to sell a “something for nothing” solution to our difficulties.   Cut taxes, cut government regulations, and everything will fix itself!  OK, that oversimplifies, but we have a public increasingly out of touch with reality, driven either by ideology or apathy.   Americans generally don’t realize how far and fast we’re falling behind.

The result is that slowly the US is fading as a world power.   China is rising, but given the intense problems China faces, including political instability (800 million still live in poverty) and oil price increases, the EU is in a unique position to be a bridge between civilizations, reflecting a core value in cross border cooperation and putting sovereignty aside for the greater good.   Muslims in Europe are modernizing, and can play a role in helping defeat extremist thinking in the Arab world.    The EU also has a generally good reputation internationally, while the US is seen as being militaristic, nationalist and arrogant.  This will also work in Europe’s failure.

The US can turn around this trend, but we first need to move away from myopic self-interest, we have to recognize that sovereignty in the age of globalization means we have to cooperate and be willing to build and participate in international law, and we have to reject simplistic ideology and emotive politicization of issues.   We can do this, but will we?